The choices for the drop downs: 1. High or low, High or low 2. High or low, high

Question

The choices for the drop downs:

1. High or low, High or low

2. High or low, high or low

3. is or is not

6. Using a payoff matrix to determine the equilibrium outcome Suppose there are only two firms that sell Blu-ray players, Movietonia and Videotech. The following payoff matrix shows the profit (in millions of dollars) each company will earn, depending on whether it sets a high or low price for its players. Videotech Pricing High Low High 9,92,15 Low 15,28,8 Movietonia Pricing For example, the lower-left cell shows that if Movietonia prices low and Videotech prices high, Movietonia will earn a profit of $15 million and Videotech will earn a profit of $2 million. Assume this is a simultaneous game and that Movietonia and Videotech are both profit-maximizing firms. will earn a profit of $2 millin, Assume this is a simultaneous game and that Movietonia and Videotech are both profit-maximizing firms. If Movietonia prices high, Videotech will make more profit if it chooses a price, and if Movietonia prices low, Videotech will make more profit if it chooses a price. If Videotech prices high, Movietonia will make more profit if it chooses a chooses a price, and if Videotech prices low, Movietonia will make more profit if it price. Considering all of the information given, pricing low a dominant strategy for both Movietonia and Videotech.

Explanation / Answer

1. Low , Low

2. Low , Low

3. Is

4 Both will choose a low price

5. False

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